Activities of USA Corporations issues abroad.
July 31, 2006 7:10am CST
Are the losses realized by USA Corporations from their activities outside the USA taxable or not?
3 Aug 06
Among other things, you need to consider how the entity generating the loss is formed for local and US income tax purposes. You need to consider the nature of the losses. You need to consider who the tax owner of the forein entity is. You need to consider how your US operations are treated for US tax purposes, i.e. do you consolidate or file separate. Having a tax id in the US only means that the IRS knows who you are, it does not give you rights to anything. You need more facts to answer the question, and in my experience it is always wise to consult an expert.
1 Aug 06
We understood from your response that, losses realized from doing business inside or outside are treated similarly, and on the same tax baises, i.e, the taxable income is negative therefore no tax is due. The purpose of raising such question is to determin wheather the "US Tax Income Law" allow for income tax deduction resulting form realized losses from business activities outside the United States, and accept such losses as a non taxable income.
• United States
31 Jul 06
If the coporation is based in the US and all of their tax ID's are located in the US then they would be taxed. "The United States follows a “worldwide” principle, taxing U.S. corporations and individuals on income earned inside and outside its national boundaries. " (http://www.fpif.org/briefs/vol3/v3n1tax_body.html)